How can brands turn customer success into their second growth engine? (feat. Daphne Costa Lopes of HubSpot)

Episode topics

• 0:00 - What is customer success and why does it matter for B2B growth?
• 1:20 - Why is new customer acquisition no longer enough?
• 2:45 - How can customer success become a second growth engine?
• 5:12 - What is HubSpot's philosophy on delivering customer value?
• 8:36 - How do you protect existing ARR and reduce churn proactively?
• 11:04 - How can CS teams identify and drive up-sell and cross-sell opportunities?
• 13:22 - What does a winning onboarding blueprint look like?
• 16:05 - How do you measure product adoption vs. actual value?
• 18:40 - How can you predict churn before it happens?
• 21:15 - How do you balance automation with high-touch customer relationships?
• 24:38 - What skills will CSMs need in the AI-powered era?
• 27:55 - How do you move CS from reactive support to strategic growth?
• 31:00 - Where can you learn more about customer success?

Transcript

[00:00:00] Robert Zirk: What's your organization's number one business priority?

[00:00:05] 62% of CEOs in an annual Gartner survey identified growth as their primary focus — the highest this percentage has been in the past decade.

[00:00:16] Traditionally B2B businesses rely on sales as their primary growth engine. It's a means of increasing revenue and expanding their customer base.

[00:00:26] But the reality is that sustainable growth doesn't just rely on acquiring new customers. You also have to keep your existing ones — the practice of customer retention.

[00:00:37] It's not a given that the customers you have today will remain your customers tomorrow, or for years to come. Your competitors are also looking to grow by winning over the customers you currently serve.

[00:00:50] B2B companies that only focus on short-term results tend to view retention as a defensive strategy and customer experience as a cost center. And far too often, brands focus on net new customers at the expense of, instead of alongside, their existing customers. The same Gartner study that identified growth as the number one priority among CEOs indicates that only 10% of CEOs consider the customer — as in, the one they already serve — to be their top priority.

[00:01:25] There's an opportunity here. What if you look beyond the defensive strategy of customer retention?

[00:01:32] Customer success is a proactive approach centered on delivering value to the customer, ensuring they meet their desired outcomes. In B2B, it encompasses fostering relationships, driving retention and aligning your own growth with that of your customers.

[00:01:50] On this episode, we'll learn how customer success can be a powerful growth driver that works alongside sales to propel your B2B business forward. Daphne Costa Lopes, global director of customer success, strategic accounts and solution architecture at HubSpot, joins me today on Questions for now where we'll ask: How can brands turn customer success into their second growth engine?

[00:02:22] Welcome to Questions for now, a podcast from TELUS Digital, where we ask today's big questions in digital customer experience. I'm Robert Zirk.

[00:02:35] Robert Zirk: Meet Daphne Costa Lopes.

[00:02:35] Daphne Costa Lopes: Hi, I'm so happy to be here in the podcast and talking about my favorite thing, customer success.

[00:02:43] Robert Zirk: In her role at HubSpot, Daphne leads teams that manage HubSpot's largest accounts, ranging from small businesses to industry giants. HubSpot is client relationship management software with an array of tools that help businesses connect with their customers.

[00:02:59] Daphne Costa Lopes: We started as a marketing automation tool and now we offer that end to end solution that actually includes customer success as well.

[00:03:06] Robert Zirk: Customer success is at the heart of HubSpot's business. And Daphne's own interest in customer success-driven growth extends well beyond her work with HubSpot.

[00:03:16] Daphne Costa Lopes: I host a podcast called This is Growth, where I talk to the CS experts, the leaders, people who are doing the work and how they're doing it. And then I also write a weekly newsletter to 12,000 CS professionals, it goes out every Friday, on how to build and scale your CS team. So basically my whole life is customer success.

[00:03:37] Robert Zirk: Throughout her more than 12 year career in customer success, Daphne has seen an evolution of what the term means, noting that it used to be synonymous with happiness.

[00:03:47] Daphne Costa Lopes: I remember seeing an article from Forbes in, I think, around 2012 and it was the rise of the Chief Happiness Officer. Everything was about making customers happy. NPS, CSAT, those were the kinds of things that customer success teams were responsible for. And then we saw a change in that. We started understanding the importance of customer success for a land and expand strategy, how important it is to deliver results for your customers so that you can renew and grow them.

[00:04:15] Robert Zirk: A land and expand strategy begins with "landing" a small piece of business, building a relationship by consistently delivering a great experience, and then "expanding" by upselling and cross-selling to win more business from the same organization.

[00:04:29] Daphne Costa Lopes: And we went into this journey of moving more towards a defensive team, so taking care of churn, preventing churn. And then, during COVID, we saw a boom of customers coming online and wanting to do more with software companies. And what happened was that we started to see the potential of customer success for growth, so as a second growth engine for the business.

[00:04:53] And that's when a lot of businesses started bringing net revenue retention into the fold as a North Star metric. That was, let's say, short-lived because the boom of COVID was followed by difficult macro environmental situations. And now we're getting back at a point where we're talking about sustainable growth. We still want customer success to drive growth, but how do we do that sustainably? How do we do that in a way that's anchored in customer value?

[00:05:20] Robert Zirk: These fundamental questions are asked daily by customer success leaders who have cultivated a growth mindset. Daphne shared insights from a previous role illustrating a shift in focus from preventing customer churn to viewing customer value as a catalyst for growth.

[00:05:36] Daphne Costa Lopes: I worked in a startup that we were partners to many technology businesses and our job was to help them retain their customers.

[00:05:45] I knew that if you bought a product and you failed to implement it, that it was harder to get that implementation back on track. I knew that you weren't going to be able to achieve your goal if you didn't get that implementation right or the adoption right. I was really focused on that churn number, right? And how do we prevent churn? How do we get better at retaining our customers?

[00:06:10] At that time, what I started seeing was that during the onboarding process, during the retainers that we had, that we always spotted opportunities for customers to do more. And that happened with our most successful customers. So a customer that bought maybe a starter package for a product, we helped them implement it, they saw a lot of success, they saw results and suddenly, they had new needs and we were able to upsell them to the next year or cross-sell to a different product. And at the time we were sending all these opportunities back, but we weren't really tracking.

[00:06:41] And it dawned on me where we had to go back to them every quarter, every six months and talk about the results that we were delivering, the quality, the capacity we had, et cetera. One of the things that I wanted to do was, "Okay, I know we're creating all these opportunities, I don't know are they closing? Are they not closing? Are they valuable? Are sales reps happy?"

[00:07:02] So let's start documenting. Let's build a mechanism to track how many of these opportunities we're sending back and how much these customers are growing. How much revenue are we generating? And the numbers were impressive and actually much more compelling than just the revenue we're saving was the revenue that we were creating for those businesses.

[00:07:21] Robert Zirk: All of this led to what she describes as a eureka moment: that customer success can serve as a second growth engine for the organization.

[00:07:29] Daphne Costa Lopes: I was like, "Ah! When a customer is successful, they grow!"

[00:07:34] And I know land and expand's the strategy and it sounds obvious, but when you're in customer success and your only job is to prevent churn and the sales job is to create opportunities, you might not have connected those dots. And I can tell you that those dots were not connected. Customer success qualified leads, as we call them today, just weren't a thing.

[00:07:52] And we started doing that very early on in 2011. And to this day, like literally 13 years later, my teams still track success qualified leads, how much money we make from them, the conversion rate. And I've been tracking this now for a very long time, and I can tell you in every single team I've had: startup, scale up, Fortune 500 business — CSQLs work and they're really valuable.

[00:08:16] Robert Zirk: Throughout her career, Daphne has hired hundreds of managers who are tasked with ensuring customer success drives sustainable growth. She noted that the most effective CSMs develop a deep understanding of what success means to their customers and then create a practical step-by-step roadmap to ensure they reach their goals.

[00:08:36] Daphne Costa Lopes: So discovery-type skills, asking great questions, curiosity. Then the next thing is the ability to do strategic planning. "Okay, I've heard what you want. How do I connect that to the product and the steps? How do we get there from a perspective of implementation or rollout?" A CSM has to always be able to do that.

[00:09:00] If they can't connect what the customer wants with how to execute on it, then they're missing the trick. The job is to do that. You do all of this through being an effective communicator.

[00:09:11] You also need to be able to communicate the value that you're delivering back to your customers, right? You need to be able to not just take in the information, but be able to pass it back and say "In six months down the line, here's what you told me you wanted. Here's what you've achieved." You need to be able to wrap up a story around it when things go south and they usually do at some point with a customer, you disappoint them, they don't achieve a goal or an implementation doesn't go the way that it's supposed to be. You need a CSM that's even keeled and to be able to communicate to the right stakeholders in the way that's needed.

[00:09:43] And then ensuring accountability. So a customer very often will tell you that they want to do all these things and they go away and they do not very much because they have other priorities, because they're overwhelmed, they don't know what to do or maybe that just fell between the cracks of what they needed to do, they forgot. So a CSM needs to be able to drive accountability with that customer to say, "You said you're going to do this. Where is it at? Is this going to delay our project? This is the impact."

[00:10:13] Robert Zirk: And when serving your top customers, as Daphne does in her role with HubSpot's strategic accounts, she notes that the importance of each of those four skills — developing an understanding of customers, strategic planning, communication and accountability — becomes even greater.

[00:10:30] Daphne Costa Lopes: The bigger the customer gets, the more complex the organization becomes. And you are going to need to navigate across multiple departments. You're going to have to navigate politics. You're going to have to understand procurement, legal. I think what happens is it's less that a brand new set of skills opens up for a CSM when they get to that enterprise level and it's more like every single one of the core skills becomes even more important and you're expected to do at a even higher level.

[00:11:01] Robert Zirk: While the discipline of customer success experiences an ongoing evolution, it remains grounded in the idea that it's meant to ensure, quite simply, that customers achieve their desired outcomes.

[00:11:12] Daphne Costa Lopes: I think customers' expectations are that we are able to deliver value to them in the way that they expect to see value. But now with AI self-service technologies, multiple channels, I think customers expect that this isn't just going to be a one on one relationship, me and my CSM or me and my professional services person. They expect this to be nearly omnipresent, right? It's inside the product. I can do this myself. I can talk to a chatbot in your website that's going to give me good answers, not a bot that's just going to get me to click through a hundred things just so that I can get to talk to a person. No, it's like a companion and co-pilot.

[00:11:50] Robert Zirk: Daphne described three levels of customer success relationships: reactive, proactive and predictive. She emphasized that brands should look to advance through each level progressively to reach the state where customer success becomes a second growth engine.

[00:12:06] Daphne Costa Lopes: Every customer success business starts from like a jack of all trades place. We're trying to do everything for everyone. At the very baseline, you are detting the foundations to what's going to be your CS department. So you're really focused on that reactive level.

[00:12:27] And then once you can get your bearings, you can put processes in place, you can learn more about your customers and you have the right data that's accessible where you can make good decisions, you can start being proactive, right? And being proactive is all about being able to anticipate your customer's needs, is observing their interactions with your product and seeing where they could be using more help, for example, and using that to prioritize outreach or content automation.

[00:12:59] So once you are proactive and you're able to get ahead of the customer need, the next thing is being predictive, which, to me, is the highest level that you can get in customer success. So now you're, again, you're not just being proactive about the customer's needs, but you can identify what they're going to need next based on where they are. And by the time that you get to predictive, and I tell you, not many people are doing predictive customer success is nearly something that is aspirational. Once you get to predictive, you can then start shaping the journey, right? You are actually driving your customer through the levels. You can speed it up, you can accelerate, you can help them see value faster.

[00:13:42] Robert Zirk: But there's no way to skip stages.

[00:13:44] Daphne Costa Lopes: You have to start somewhere and you always start being reactive because you don't have data. Can you reduce the amount of time you stay in reactive? Absolutely.

[00:13:53] Robert Zirk: And the insights you gain from understanding existing customers can help you progress through the stages faster with newer customers.

[00:14:00] Daphne Costa Lopes: It's what we call the network effect is when you learn enough about what works for customers, when a new customer comes through the door and they look like those other customers, you can actually guide their journey and make them successful faster because now you know what it takes to be successful.

[00:14:18] So I think that network effect is such an important strategic advantage for companies. And I think it's definitely something that customer success teams and product teams should be really acutely aware and trying to create for themselves.

[00:14:31] Robert Zirk: Daphne spoke to how customer success has served as the second growth engine for HubSpot, and shared what metrics help to track that success.

[00:14:40] Daphne Costa Lopes: Growth and retention are two north star metrics that every single SaaS business should have. The retention is important because it will tell you whether you have a leakage problem, right? So if you have a churn problem or a downgrade problem, it would indicate that you are having trouble delivering value for customers.

[00:15:01] Now, there are many reasons why you'd have problems with that and some of them could be product-led, sales-led, go to market-led. There's a ton of reasons why you could, but that metric will tell you how efficient you are at retaining the business that you acquire. And we know acquiring business is expensive.

[00:15:20] Robert Zirk: A HubSpot study suggests that the cost of a new customer is five to 25 times more expensive than retaining an existing one.

[00:15:28] Daphne Costa Lopes: So it's important to have a handle on that metric. And I think that's like table stakes. You can't get to growth if you don't have retention fixed because if you don't have retention fixed and you're focused on growth, you're filling a bucket that's filled with holes, right?

[00:15:44] You're trying to grow and grow, but it's unsustainable because you keep losing and losing. So you have to get retention right as a baseline. And that has always been a metric that we had at HubSpot from when I started, retention was the metric we used as a north star metric.

[00:15:59] Then the next level is the growth metrics, and some companies will combine, they will have a net revenue retention number, which is a combination of the retention and the growth metric. Some companies will have the expansion rate metric or a quota for dollars where, you know, there's a quota for the team to hit, so that might be in different ways, shapes or form.

[00:16:22] At HubSpot, we've had net revenue retention as a north star metric for the CS team. We've also had more leading indicators of net revenue retention like success qualified leads. So the expectation is that the customer success team will identify the opportunity, pass it on to sales and sales will close it.

[00:16:40] So that's the metric that we use for growth. Of course, this is like for the individual CSM, but as a business, we track net revenue, retention, expansion rate, cross sell rates. Like, we track all of those because I think it's important to have the finger on the pulse on your business, right?

[00:16:55] Just like, what is working? Why is it working? Where are things not working? What do we need to do to improve there? So we monitor all those metrics, both for retention and growth, but for the CSM, we measure them in retention.

[00:17:08] And then we have leading indicators, including the success qualified lead.

[00:17:13] Robert Zirk: These success metrics are fueled by delivering exceptional experiences that create value for customers. Daphne shared how HubSpot achieves this, starting with a deep understanding of customers and their goals.

[00:17:25] Daphne Costa Lopes: At HubSpot, we are really maniacal about delivering great experiences. And I think the baseline for us is having the entire customer-facing team in one platform. And I know it's biased because we sell a customer platform, but we really believe it, like we drink our own champagne in this stuff. And we think that when the data from marketing, sales, services and CS are all together in one place, that will help you, first of all, give the customer a more personalized, more tailored experience.

[00:17:58] If you think about the information that your sales team needs to have when they contact a lead for the first time, what kinds of documents they were looking at, what they downloaded, what e-book they were interested in, what parts of your site they visited — them having that information helps them have a better conversation. The same way that CS having the information of what happened in the sales conversation and not just traveling eventually, but actually automatically, the first conversation you have with the customer is already a tailored conversation. That is really important. And it's the same, like, ongoing for customer success, right?

[00:18:31] 'Cause that's the beauty of customer success is that you're going to be talking to that customer every month, every quarter, every year. And that means that every other touch point that they have with your company — events, webinars, academy courses, support tickets — all of those that they consume should inform the conversations that you have.

[00:18:51] So for us, the baseline of offering an unparalleled, unrivaled experience is having the right data to be able to have personalized conversations. One of my pet peeves is the broken telephone: every time you pass on from a department to the other, you have to retell your story. And that's something that we're really passionate about in HubSpot, not doing that for our customers.

[00:19:12] Robert Zirk: Another key component of HubSpot's approach to a great experience is ensuring customers have easy access to the self-service resources they need, which include courses and knowledge base articles.

[00:19:23] Daphne Costa Lopes: We want our conversations with our customers, from a CS standpoint, to be high value and high quality conversations, not just to be how-to conversations.

[00:19:33] So we want to make sure that when a customer is trying to do something new, that is available at their fingertips when they need it. So when they're building a workflow, if they're stuck, that they can find the right information to get unstuck and that they don't have to wait a week to get on the phone with a CSM to be able to answer those.

[00:19:49] Robert Zirk: And finally, Daphne highlights the importance of strategic conversations that clearly define goals and a plan to achieve them, based on what customer success means to the customer, as integral to HubSpot's customer experience.

[00:20:03] Daphne Costa Lopes: What do they want to see? What do you want to measure? How do we achieve that? And then reporting it back and having enterprise business reviews with them to have a look at how the business is performing and what opportunities exist to do more.

[00:20:16] HubSpot also bought a media company a few years ago, The Hustle, and we have a podcast network. So we're really intentional about creating brand experiences where the customers get information, education, inspiration from other areas, not just their CSM. Their CSM obviously is a part of the journey, but it's not all of it. So I think for us, customer success is a philosophy and that is really everywhere in the customer experience.

[00:20:44] Robert Zirk: Given her role in strategic accounts, I asked Daphne whether there's a difference in how the experience is delivered to top customers, as opposed to the wider customer base. She acknowledged that often, businesses think to segment customers based on what they spend, which then translates into the resources they receive. But she also noted that there are ways to build your experience that can make every customer feel like a top customer and she shared how HubSpot achieves this.

[00:21:12] Daphne Costa Lopes: A customer that spends a lot of money is a customer that is also more complex, that has more stakeholders, that has more moving parts, and that means that they need the extra support versus someone that might not necessarily have that level of complexity.

[00:21:25] So I think that's the basic framework for most people. And it's where HubSpot started as well. Our segmentation strategy started based on, like, how much money do you spend with HubSpot and what resources can we put into your business in order to help you succeed?

[00:21:41] I think where HubSpot definitely has a differentiation is we've built such an incredible content muscle in terms of what we can offer customers in a one-to-many format. Our academy is so renowned, like people take our academy courses all the time and they publish on their LinkedIn profiles because they get all of our certifications and that helps their career. Our community, connecting people with other people like them, that are solving the same problems as them without HubSpot being the middleman.

[00:22:12] So our community is incredible. The knowledge base articles at HubSpot are really thorough and updated really fast as we actually release product, which really helps people doing stuff on their own. I use HubSpot myself for my newsletters. And I think that, obviously, I have all access that I need in terms of finding answers, but I never actually have to, because my use case is pretty basic and I can always find everything I need online. I literally, I will Google the things I need to do and I find them. So I think we've done really well in supporting those smaller customers without actually placing a human being on the other side of the phone.

[00:22:51] Now I say that, but also our support team is available to all of our paying customers and it's incredible. We have a really amazing support team. So if you're really stuck, like, you can actually access a human. It's not: we're blocking the door and you can't. So we have our chat on our website. You can call. But then as we matured, what we started doing was we started adding that complexity layer into our segmentation and thinking about it. How do we prioritize engagement with customers? Customers that need us the most and our customer success operations team has done just a phenomenal job at helping different segments within those segments prioritize who are the customers that need the most help and why, so that CSMs can get in touch with the right information at the right time.

[00:23:38] And we do that by monitoring adoption value. So we have value metrics where we look at how much value the customer is extracting from HubSpot, because you do have cases where a customer is using a lot, but is failing, and we don't want that to be something that falls through the cracks, as in you're using a lot, you're clicking all the buttons, but you're not getting anything out of it. So we monitor that. We monitor adoption, we monitor value, we monitor consumption of different subscription types. So we look at all those things to decide how do we put resources into the right places.

[00:24:10] Robert Zirk: Technology plays a central role in delivering the kinds of experiences that bring value to customers. Daphne noted that bridging data from areas outside of the customer platform can be a challenge but AI copilots help HubSpot CSMs deliver more meaningful customer interactions by gathering information to prepare for calls and summarizing recorded calls to note key points and action items.

[00:24:35] Daphne Costa Lopes: I don't think there is a world where I see those two things separately. The team is the team plus tech.

[00:24:42] Robert Zirk: We spoke earlier about how HubSpot prioritizes making self-serve resources accessible to its customers. Daphne expanded on how AI is leveraged to help get the right information to the right people and why it reinforces the need for quality content.

[00:24:57] Daphne Costa Lopes: The quality of the content that you have matters. And I've been talking to a few leaders that are figuring out, like, "how do I prepare for the AI that we're going to need in a few years? How do I prepare to get my team to the next level using AI?" And I say, don't sit idle because you haven't bought the technology that has the AI baked into it.

[00:25:17] Content, great playbooks, calls that are like exemplary calls of how CS should be done, case studies from your customers — all of this stuff is valuable in the world of AI. So don't sit idle, invest on those things, even if you can't invest on the AI tech right now, because it is emergent, is new. A lot of platforms don't have it yet. In HubSpot, some of the examples I was giving you are things we built natively. We have a team of CS ops and data scientists that are building stuff for us. But if you don't have that, you can still prepare for it by having great content available.

[00:25:54] Robert Zirk: On Daphne's podcast, This is Growth, leaders and experts share strategies and best practices in customer success. I asked what topics or trends are top of mind in recent conversations she's had with guests and one recurring theme has been correcting misguided approaches to scaling customer success.

[00:26:14] Daphne Costa Lopes: We have a tendency of throwing people at problems and, most recently, our tendency has been to buy isolated tools to solve isolated problems and that is really creating a problem for us of data silos and ultimately lackluster customer experiences because we're not able to get the right information to tailor and personalize the customer journey. So for me, that is both a challenge and an opportunity that I see.

[00:26:43] Robert Zirk: And finding new ways to provide value for customers is always top of mind.

[00:26:47] Daphne Costa Lopes: Most CS teams that I talk to are still struggling to define what value is for their customers and they are in a place where they're like, "Value is unique to every customer," which if you're working in a service business, that every customer that comes through the door is completely different and you're building bespoke solutions, I would say you're right.

[00:27:08] But if you're in a product company or a repeatable service company where you have a market that you serve, a set of problems that you have chosen to solve for, use cases, jobs to be done, then I think this is a little bit of an excuse to not do the hard work, which is figure out "What are the key metrics that we should bake into the product and how do we build playbooks that deliver on those metrics?" So I think delivering customer outcomes is probably the biggest piece of work that CS teams need to do if they want to evolve and continue to do a great job.

[00:27:45] I run a trends survey — this year is the second year — where I look at the top challenges and opportunities for next year. And last year, delivering customer outcomes was the top challenge customer success teams had. And this year, I haven't closed off the results of the survey, but in looking at it really quickly, I can say that that seems to still be a top challenge for most CS organizations. And I think again, like any challenge is also an opportunity to actually go and do that work, reimagine how we structure customer success teams. Because I think we've structured the success team very internally focused, right? Just like, "What are the things that we need to do?" We have the onboarding phase, we have the renewal phase and we have everything in the middle.

[00:28:26] And we structure the CS team in that way, instead of saying, "What are the things that the customer wants to do? What is the value that they're expecting? What are the milestones on delivering that value and what work needs to be done at different stages? How does the CSM help?" So I think really refocusing on how to deliver value for the customer is a much better way of seeing this.

[00:28:47] Robert Zirk: In addition to scaling effectively and creating customer value, customer success leaders are also focused on how the value they provide can translate to creating customer advocates through word of mouth.

[00:28:59] Daphne Costa Lopes: Most CS organizations that I see, they're not actually measuring the same way that I talked about the success qualified lead way back in 2011. How many customers, how many CS organizations are actually measuring the referral rate? NPS, for example, Net Promoter Score — it's like a hypothetical question: "Would you refer us?"

[00:29:19] How about we measure "Did you refer us? Are you referring us?" That's a much better metric to say your customers are advocates or not. I don't actually see this in a lot of companies, but I think it's, again, the next level of when you retain your customer, when you're able to grow your customer. Now, the next is "How can your customer become a magnet for other customers, for your business?"

[00:29:47] Robert Zirk: If you'd like to learn more about how customer success can translate to growth, follow Daphne Costa Lopes on LinkedIn, subscribe to This is Growth at thisisgrowth.media, and follow This is Growth wherever you listen to podcasts.

[00:30:02] I'd like to thank Daphne Costa Lopes, global director of customer success for strategic accounts and solution architecture at HubSpot, for joining me and sharing her insights on customer success today. And thank you for listening to Questions for now — a TELUS Digital podcast.

[00:30:19] If you enjoyed today's episode and want to hear more compelling insights on all things digital customer experience, be sure to follow Questions for now on your podcast player of choice and make sure you're getting notifications every time there's a new episode.

[00:30:33] I'm Robert Zirk, and until next time, that's all... for now.